The Finance Act for 2024 (Article 112, I-B) has extended the cases of taxation in France of rental services of movable goods (other than means of transportation), carried out for the benefit of non-taxable persons (B2C) established, domiciled or having their habitual residence in a country outside the European Union (EU).
Prior to this amendment, rentals made by a French supplier to a lessee established, domiciled or habitually resident outside the EU (e.g., a British tourist renting skis) were not subject to VAT in France, even when the goods were used in France. It was the same for rentals made by a service provider established in another Member State or outside the EU, for the benefit of a same lessee.
VAT is a tax due at the place of the consumption of a service: it seemed not “normal” that these situations escape VAT. France has therefore made use of the option offered by Article 59 b of the VAT Directive (criterion of the place of “actual use or enjoyment” of the service), to amend Article 259 C of the French Tax Code and add a 3° to it.
As a result, since January 1, 2024, rentals of movable goods (other than means of transport) are subject to VAT in France as long as the lessee is neither established, domiciled nor habitually resident in the EU; that he or she effectively uses or enjoys the property in France; and this, regardless of the place of establishment of the service provider.
This amendment has just been commented on in the official tax guidelines BOI-TVA-CHAMP-20- 50-40-10 and BOI-TVA-CHAMP-20-50-50 of 5 June 2024.
In particular, it is specified that the place of actual use or enjoyment should be understood as the place where the movable good is made available to the lessee, which seems to exclude the case of goods made available outside France, but actually used in France.
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